In a surprising turn of events, Elon Musk's artificial intelligence venture, xAI, is encountering hurdles in securing a $5 billion debt package through Morgan Stanley. The deal, aimed at funding the company's ambitious AI projects, is reportedly facing investor hesitancy due to a public rift between Musk and U.S. President Donald Trump.
According to recent reports, Morgan Stanley is expanding its outreach to a broader pool of investors to drum up interest in the debt sale. The political friction between Musk and Trump, once close allies, has raised concerns among potential lenders, with some fearing increased lending costs or even complete withdrawal from the deal.
The feud, which has played out publicly on social media platforms like X (formerly Twitter), is creating ripple effects across Musk's business empire. xAI, which merged with X earlier this year, is at the center of this financial storm, as the debt deal is critical for funding its data infrastructure and growth in the competitive AI sector.
Investors are particularly intrigued by the opportunity to gain exposure to the AI industry, typically accessible only through equity investments. However, the political fallout has led to slipping bond values, prompting Morgan Stanley to consider adjusting the terms of the deal to make it more attractive.
This development adds another layer of complexity to Musk's portfolio, with companies like Tesla and SpaceX also under scrutiny amid the Tesla stock drop of $150 billion following the public spat. Analysts are closely watching whether xAI can navigate these turbulent waters and secure the necessary funding.
As the situation unfolds, the tech and financial worlds are abuzz with speculation on how this feud might impact not only xAI's immediate financial plans but also the broader landscape of AI investment and innovation under Musk's leadership.
Alfred Lee
